Summaries - I
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Indian Creek Lumber Co. v.
Commissioner
43 T.C.M. 841 Tax Ct. Mem. Dec. (CCH) 38,877(M), (P-H) ¶82,146
(Timber issue only)
The taxpayer produced lumber from timber purchased from the United
States Forest Service (USFS) and numerous other outside sources. In 1973
the business, which included a USFS and a private timber cutting contract
(Cheney), was sold. On its 1974 tax return taxpayer reported a long-term
capital gain of $1,458,735 from the sale of the cutting contracts,
pursuant to Section 631(b). The government contended that the sale of the
contracts did not qualify for capital gains treatment under Section 631
(b) because an economic interest was not retained. Furthermore, the
government maintained that the contracts did not otherwise qualify as
Section 1231 property and were not capital assets since they fell within
the exception to Section 1221 defined by Corn Products Refining Co.
v. Commissioner, 350 U.S. 46 (1955).
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